Chile, Korea to Launch Trade Talks; EU, S. Africa Tipsy Over Sprits

15 November 1999

The EU and South Africa missed a 31 October deadline for resolving outstanding issues around the EU-South Africa agreement on trade in wines and spirits. This annex agreement to a broader trade, development and co-operation agreement set to come into force in January 2000 will encompass 90 percent of the US$20 billion in annual bilateral trade between the EU and South Africa (see BRIDGES Weekly Trade News Digest Vol. 3, No. 5, 8 February 1999).

The EU and South Africa on 11 October signed the broader agreement, despite disagreements over wines and spirits. Since then, the EU and South Africa have been unable to agree over how to draft the legal language of the wines and spirits annex agreement - in part due to the EU's insistence that South African producers cease the use of "geographical denominations" protected under EU law. South Africa argues that the latter issue should be addressed under multilateral agreements rather than bilateral agreements. South Africa said giving in to EU demands would set bad precedent for developing countries. Meanwhile, most observers note that both the EU and South Africa have lost confidence in each other's commitment to implementing the accord.

In other news, the U.S. Congress must still resolve differences between House of Representatives and Senate versions of an African and Caribbean trade bill. (See BRIDGES Weekly Trade News Digest Vol. 3, No. 44, 8 November 1999, ) While resolution this year is unlikely, the Clinton Administration would like to get the bill finalised in time for the WTO Ministerial in Seattle in an effort to sound credible when stressing U.S. commitment to developing countries.

Chile, on 18 October, signed a framework free trade agreement with five Central American countries. The framework agreement allows Chile to negotiate separate trade agreements with Honduras, Nicaragua, Guatemala, El Salvador, and Costa Rica. Chilean President Eduardo Frei said the agreements would help the smaller Central American countries become more competitive on the global market. Trade between Chile and the five countries was worth about US$108.9 million in 1998.

Meanwhile, Chile will begin trade talks with Korea in December towards the first trans-Pacific trade agreement. Through a Chile-Korea agreement, Korea could gain important entry into the Central and South American markets, thus benefiting from Chile's trade agreements with Honduras et al, as well as from Chile's associate membership in the Southern Cone Common Market (Mercosur, comprising Argentina, Brazil, Uruguay, and Paraguay).
"EU in move to find way round South Africa drinks impasse," FINANCIAL TIMES, 10 November 1999; "Regional trade bill, global implications," JOURNAL OF COMMMERCE, 9 November 1999 "Central America, Chile sign free-trade agreement," REUTERS, 18 October 1999; "Chile, Korea in trans-Pacific talks," JOURNAL OF COMMERCE, 19 October 1999.

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